May 29, 2025
With improving fundamentals and clear long-term demand drivers, multifamily housing stands out as a strategic investment opportunity in today’s market. This is the overarching takeaway from a white paper issued this month (May 2025) by Stockbridge Capital Group LLC in collaboration with John Burns Research & Consulting.
In short, for investors with a long-term view, the current multifamily market offers future appreciation as supply tightens and rent growth follows. The compelling drivers outlined are core to the key strengths of NexMetro’s build-to-rent investment opportunities and why we are bullish on investment now.
The improving fundamentals and long-term demand drivers outlined below further magnify the compelling lifestyle that build-to-rent neighborhoods offer consumers seeking to rent. Below is a summary of the white paper highlights: Long-Term Housing Undersupply
• Rental housing will continue to benefit from structural tailwinds of the demand/supply imbalance of population growth and available rental housing.
• The U.S. housing market remains deeply undersupplied with an estimated shortfall of at least 1.2 million units as of 2025, with over half being rental housing.
• The supply/demand imbalance will help fuel apartment demand, ultimately supporting both occupancy and rent growth. A Pullback in Multifamily Construction
• In 2024, multifamily housing starts fell 25% year-over-year after a wave of year-record deliveries.
• Over the past five years, the percentage of renters moving out of professionally managed apartments has dropped from 51% to 41%.
• A decline in future supply means reduced competition for attracting tenants in the years ahead (which means rent growth in line with normal market conditions and improved occupancy rates).
Generational Shifts to Fuel Rental Demand
• There has been a clear and consistent generational behavioral shift in the timing of key life milestones among U.S. adults with significantly fewer 30-year-olds married, being a parent or owning a home.
• Delays in reaching traditional adulthood milestones suggest an extended renter lifecycle.
• Rental housing could be an increasingly chosen housing solution for many as they become homebuyers later in life.
Affordability Crisis Driving Higher Rentership
• Home prices and a spike in mortgage rates have pushed the cost of homeownership out of reach for many.
• The rent vs. cost gap is significant, with purchasing an entry-level home in 2024 required monthly payments nearly double those of renting an average apartment.
Pricing on Multifamily Acquisitions
The tight lending environment and market challenges of the past 24 months have impacted valuations. Meanwhile, this is exactly why NexMetro analyzes the timing and method of asset disposition for each of our investment projects in the best interest of its investors.
Very recently in fact, we completed a $333 million recapitalization of a portfolio of eight properties – and Stockbridge invested $65.9 million of preferred equity alongside existing assumable agency financing totaling $206 million. The company made a strategic decision to hold on to key assets longer in the best interest of our investors. At the same time, we jumped on an opportunity to sell assets this year after receiving out-of-market offers that resulted in solid returns to our investors. This kind of pragmatic approach to asset management has allowed us over the last 10+ years to maximize value with market-aware dispositions with discipline and strategic foresight.